Unhappy with GMR’s fund-raising plan
NEW DELHI: This appears to be a step back from the avowed privatisation of airports by the government. The civil aviation ministry has agreed to pump in another Rs 715 crore into the modernisation of the Delhi International Airport (DIAL) despite it having handed over the reins of this airport to private developer, the GMR Group.
Reason? The government was not happy with GMR’s earlier proposal to raise Rs 2,750 crore (of the total project cost of Rs 8,900 crore) by accepting deposits from bidders wanting to develop a portion of the airport land.
It feared that if such a revenue model was allowed, the share of overall revenue earned by the Airports Authority of India (through which government holds 26% equity in DIAL) would drop to a mere 4% from 46% envisaged originally.
So, after hectic negotiations over methods to raise this amount, the government has finally agreed to pump in more equity.
DIAL was set up as a joint venture between GMR (50.1%), AAI (26%), Fraport and Malaysian Airports (10% each) and IDFC (3.9%). Of the total Rs 2,750 needed, each stakeholder will bring in its share. An agreement for this fresh equity investment is expected to be signed between the stakeholders before March 31 this year.
As per the original project plan, DIAL will see an investment of Rs 8,900 crore in phase I. Of this, Rs 1200 crore was to come in the form of equity by stakeholders, Rs 2,750 was to be raised through commercial development and another Rs 4,950 crore was the debt component.
A senior DIAL official confirmed the plan to raise fresh equity for the project; he also acknowledged that GMR has decided to drop the plan to raise deposits for now. The deposits were to be raised for commercial development of a small portion of the airport land, but now GMR has delinked commercial development from the airport development work.
The dispute between GMR Group and the government began some months back when DIAL formed a subsidiary, Delhi Aerotropolis Pvt Ltd (DAPL), for the hospitality project. It was planning to charge Rs 13 crore per acre, in addition to a deposit of Rs 50 crore per acre from hospitality project bidders, for providing infrastructure facilities. Both these charges would have collectively lead to a revenue generation of about Rs 2,835 crore for the consortia, a sizeable chunk of the Rs 8,900-crore phase-1 development plan for DIAL which has to be completed by 2010.
However, the civil aviation ministry was insisting on a financial model that ensures 46% share of all revenues for AAI, as agreed in the privatisation plan for the Delhi airport.
